On a soyabean farm in Ohio, America’s largest solar manufacturer is trying to beat China to the next breakthrough in clean energy.
This month, First Solar opened the country’s largest solar research facility in the Rustbelt state, where it has manufactured panels since 2002. The objective: to commercialise the next generation of technologies to harness power from the sun before Beijing does.
The company’s push into research comes at a tumultuous time for US solar manufacturing, and is motivated by the belief that to compete on clean technologies, the US must innovate rather than replicate China.
“We’re not going to follow this race to the bottom on pricing,” Mark Widmar, First Solar’s chief executive told the Financial Times. The company is spending about $500mn on the research facility, along with a new pilot line for an unproven but potentially revolutionary solar technology known as perovskites.
“We need to think about how do we continue to grow and how do we differentiate ourselves and it needs to be through technology leadership,” Widmar added.
Many US solar manufacturers have scrapped or delayed factory projects in the past year as China’s overproduction of panels dragged prices to record lows and rendered many western operations unprofitable even when accounting for subsidies and tariffs.
First Solar, meanwhile, has ploughed steadily forward, investing $2.4bn in manufacturing after the passage of President Joe Biden’s landmark Inflation Reduction Act, which included lucrative 10-year subsidies for the first time for producers.
The subsidies and the IRA’s incentives to buy US-made technologies have been a boon for the company: its share price has nearly doubled since the Democratic-backed law was enacted. First Solar’s growing profile has raised concerns among industry members that it may lobby for protectionist policies that benefit its bottom line but make it more expensive for customers to decarbonise.
“They’re on a tear right now,” said Michael Parr, executive director of the Ultra Low-Carbon Solar Alliance, a trade group. “The scale of First Solar’s work is very promising and validating the view that innovation is going to be what grounds the US industry successfully.”
First Solar is the only sizeable solar manufacturer that survived the wave of offshoring and bankruptcies in the 2010s which claimed, most notably, Solyndra, a start-up that defaulted on a $535mn Department of Energy loan and cast a negative light on government funding for clean tech for years.
What helped insulate First Solar is its now spun-off projects business and its largely domestic supply chain, a result of a bet in the 1980s on a technology known as cadmium telluride. While these panels make up a fifth of US projects, almost entirely supplied from First Solar, it is less than 5 per cent on a global market that is overflowing with Chinese crystalline silicon panels.
“They were the last company standing for a while in the United States largely because they never incorporated China into their manufacturing strategy,” said Mike Carr, president of the Solar Energy Manufacturers for America coalition, an industry group.
First Solar also operates research centres in California and Sweden, and invested $152mn in research and development in 2023, up 35 per cent from the year before. Among its rivals, Canadian Solar invested $101mn in R&D last year, up from $70mn the previous year. Qcells, which manufactures in Georgia, spent “hundreds of millions” on R&D last year, it said.
Becca Jones-Albertus, the director of the DoE’s solar energy technologies office, said R&D was “critical to long-term supply chain competitiveness”. The department dedicates $300mn annually to “research, development and demonstration” efforts to advance solar.
But on innovation the US still lags behind China, which filed more than 9,000 solar patents last year compared to less than 350 in the US, according to the International Renewable Energy Agency.
Industry members warn that market conditions must improve before innovation can be achieved. “You can’t justify trying to get to the next technology level while losing millions of dollars,” Carr said.
US-made crystalline silicon panels generate energy at an average cost of 29.5 cents per watt, while First Solar’s panels hover above 30 cents per watt and were less efficient, according to BloombergNEF. A panel sourced in south-east Asia, meanwhile, can cost under 16 cents per watt, and in China, it is 10 cents per watt.
Cheap panels have helped solar become the fastest-growing source of new US power generation, but have prompted domestic manufacturers to call for greater trade protections.
In April, First Solar filed a petition with several other manufacturers to the US Department of Commerce and International Trade Commission, accusing Chinese companies of dumping solar cells in south-east Asia, where the US sources the bulk of its supply. New tariffs could reach 270 per cent depending on the company and country.
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The case has divided the US solar sector, with companies accusing America’s flagship manufacturer of “cornering the market” by pushing for protections that hurt its competitors and make decarbonisation more expensive.
The dispute points to perhaps the biggest advantage of First Solar: given its size and vertical integration, it can provide developers’ assurance on deliveries in a volatile trade landscape, a certainty that is worth its higher price.
“First Solar’s strength really is its lawyers,” said Jenny Chase, an analyst at BloombergNEF. “It’s purely about the trade wars.”
The political might of First Solar — and the lure of clean energy jobs — will be put to the test in November’s US elections. Its Perrysburg facilities are in a House district where the Democratic incumbent is facing a Donald Trump-backed challenger. JD Vance, Trump’s running mate, is a senator for Ohio, a swing state and top destination for solar manufacturing. Both Trump and Vance have attacked the IRA, with Trump vowing to “terminate” it.
While the IRA passed with no Republican votes, analysts say the law’s disproportionate returns to red districts gives it staying power in the event of a change in administration.
“This is an inflection point for this industry. If we are unable to establish a domestic industry under the IRA programme right now, I don’t think it ever happens,” Widmar said.
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